Tax office chief Darmin Nasution has indicated that it may check in the next two months on companies enjoying the government's tax incentives to make sure that benefits are passed onto payrolls and salaries.
The Rp 6.5 trillion (US$624.4 million) tax incentive, applied in the agriculture, fishery and manufacturing sectors, is part of the economic stimulus package aimed at bolstering spending power to generate robust consumption, to counter the global economic crisis.
It has been valid since March.
Workers with a monthly salary below Rp 5 million are entitled to the incentive, meaning they are not required to pay income tax this year.
The Ministry says companies receiving extra money from tax cuts should pass it onto staff salaries.
Most companies in Indonesia cover, partly or entirely, their workers' individual tax contributions.
"*The tax incentive started to apply to* salary payments on March 10.
"We gave a month for tax office branches and another one month for district offices to process the *tax* forms.
"So the forms reach the head office in May. If we want to evaluate, it will be within two or three months from when the policy was made valid," Darmin said Thursday.
Among the three sectors, workers in the manufacturing business will receive the biggest incentives, along with sub-sectors like food and beverages, milk, shoes and printing including newspapers.
The agricultural sector includes food crops, plantations, hunting and animal breeding.
The fishery sector includes sea-fishing and sea-plant cultivation.
Darmin said his office had the data so it could check if companies had given their employees tax rebates to help increase their incomes (even though the companies usually paid workers tax contributions).
If the tax office saw any suspicious practices, e.g. that companies did not pass the incentive onto their workers, Darmin said "We have clear lists *that can be used as guidance* whenever we want to check the companies."
Under the tax law, which was endorsed last year, the taxable income threshold is set at Rp 15.84 million per year.
The tax rate for workers with an annual income of less than Rp 50 million is 5 percent. For salaries between Rp 50 million and Rp 250 million, the tax rate stands at 15 percent.
The tax incentive is highly important as Indonesia's economy is currently about 70 percent supported by domestic demand. If demand falls, the economy will slump.
The government now expected the economy to grow at between 4 percent and 4.5 percent during this year, estimating it grew by 4.6 percent in the first quarter of 2009 as consumption remained robust.
Anggito Abimanyu, Finance Ministry's head of fiscal policy, said the government recorded the highest monthly tax revenue so far this year in April, at Rp 58.7 trillion.
"April's tax revenue was very high. We are still optimistic about the projected state revenue for this year," he said.
Also on Thursday, the tax office met with lawmakers to finish their joint deliberations on value-added tax and the luxury tax law.
Lawmaker Vera Febyanthy said the law would be endorsed before lawmakers ended their current term in October, after which the new members would take up their seats.
